Consider the ISLM model. If the government and central bank used a combination of expansionary fiscal policy and expansionary monetary policy, which of the following would occur? (a) There would be a rise in equilibrium national income and a fall in the equilibrium rate of interest. (b) There would be a fall in equilibrium national income and a fall in the equilibrium rate of interest. (c) There would be a rise in equilibrium national income and an unknown effect on interest rates. (d) There would be a fall in equilibrium national income and a rise in the equilibrium rate of interest.
Consider the ISLM model. If the government and central bank used a combination of expansionary fiscal policy and expansionary monetary policy, which of the following would occur? (a) There would be a rise in equilibrium national income and a fall in the equilibrium rate of interest. (b) There would be a fall in equilibrium national income and a fall in the equilibrium rate of interest. (c) There would be a rise in equilibrium national income and an unknown effect on interest rates. (d) There would be a fall in equilibrium national income and a rise in the equilibrium rate of interest.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider the ISLM model. If the government and central bank used a combination of expansionary fiscal policy and expansionary
(a) There would be a rise in equilibrium
(b) There would be a fall in equilibrium national income and a fall in the equilibrium rate of interest.
(c) There would be a rise in equilibrium national income and an unknown effect on interest rates.
(d) There would be a fall in equilibrium national income and a rise in the equilibrium rate of interest.
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